Sekret Firmy’s Dmitriy Lisitsin Interview Excerpts

Dmitriy Lisitsin: I read where you say that productivity is a prerequisite for creativity. Can you give me some examples that would illustrate this?Michalko: Yes. Thomas Edison, for example, held 1,093 patents, which remains the record number granted by the United States Patent Office. Albert Einstein had 248 publications to his credit, Charles Darwin 119, and, within psychology, Sigmund Freud 330, Alfred Binet 277, and Francis Galton 227. Mozart had well over 600 compositions to his credit before dying at age 35, and Schubert composed more than 500 works before succumbing to typhus at 31. Bach’s extant compositions, numbering over a thousand, fill 46 volumes. Bach averaged 20 pages of finished music per day, reportedly enough to occupy a copyist, working standard business hours, a lifetime just to write out the parts by hand. Such prodigious output recalls Thomas Edison’s famous remark: “Genius is one percent inspiration and ninety-nine percent perspiration.” The pen, the paintbrush, or the chisel never seems to rest. Rembrandt produced around 650 paintings, 300 etchings, and 2,000 drawings, and Picasso executed more than 20,000 works.

Dmitriy: You wrote that all the shipping and delivery experts in the U.S. doomed Federal Express to failure, because they said no one would pay a fancy price for speed and reliability. They were, of course, all wrong. Why do you think it is so difficult for people to give true value to new novel ideas?Michalko: When confronted with a truly original idea, we experience a kind of conceptual inertia comparable to the physical law of inertia which states that objects resist change; an object at rest remains so, and an object in motion continues in the same direction unless stopped by some force. Just as physical objects resist change, ideas resist movement from their current state and change in their direction of movement. Consequently, when people develop new ideas they tend to resemble old ones; new ideas do not move much beyond what exists.

The more educated and expert the person is, the more change is resisted. They see what they expect to see, not what is there. At one time, ancient astronomers believed that the heavens were eternal and made of ether. This theory made it impossible for them to observe meteors as burning stones from outer space. Although the ancients witnessed meteor showers and found some on the ground, they couldn’t recognize them as meteors.

Dmitriy: I was taught “If it ain’t broke, don’t fix it,” by my professor at the University of Moscow. You, on the other hand, dismiss this as complacency and fear of failing at trying something new. Isn’t avoiding failure better than risking failure? Would you elaborate on this?Michalko: If you show me someone who has never failed, you are showing me someone who has never tried anything new. Once Thomas Edison’s assistant asked him why he continued to try and invent a light bulb after so many failures. Edison said that he had no idea what he meant by the word “failure,” as he has learned thousands of things that don’t work. Innovative companies and people understand that whenever we try to do something and fail, we end up doing something else. The two most important questions to ask when we fail are: “What have I learned?” and “What have I done?”

These are questions that are asked at Dell computers today where innovation is about taking risks and learning from failure. Today, Dell is well known for inventory management, logistics, and supply chain management. That wasn’t always the case. In 1989, they were faced with a disaster that rocked the company. The personal computer industry was making a transition to a new type of memory chip, and Dell was way overstocked with the old chip.

That was a costly mistake for a small company, and it took over a year to recover, but Dell learned from it. The failure led them to create and develop a new way to manage inventory, and they went from being in the last place in the minor leagues of the computer industry to the major leagues.

Dell discovered what all innovators know … that failure is a prerequisite to invention. No business can develop a breakthrough product or service if it s not willing to encourage risk taking and learn from the subsequent mistakes. IBM s Thomas Watson, Sr. put it this way, “The fastest way to succeed is to double your failure rate.”

Remember the Ford Edsel? Everybody knows the Ford Edsel was the biggest new car failure in automotive industry. What people don’t realize is that the Edsel was the foundation for the company s later successes. When the Edsel spectacularly bombed, Ford executives realized that something was happening in the automobile market. No longer was the market segmented by income groups; the new principle of segmentation was lifestyles. Ford s response was the Mustang, a car that reestablished Ford as the industry leader.

Understanding how and why Ford succeeded after the failure, changes one s perception of the value of the failure of the Edsel. The glass is half full and the glass is half empty are descriptions of the same phenomenon but have vastly different meaning. Changing a company’s perception from half full to half empty opens up big innovation opportunities.

Dmitriy: That’s interesting. So, it’s all about how you perceive the meaning of “failure.” A change in perception of failure does not alter facts. It changes the meaning of failure into something good.Michalko: Right. You do not see things as they are, you see them as you are. There was a time when no one wanted to use 3M’s Post-It notes. Advertising failed. Direct marketing failed. Sales presentations failed. No executive at 3M believed there was a market for it. Arthur Fry the corporate scientist that created the Post-It note had to plead with management not to kill the product. Desperate, he launched his own innovative campaign to generate interest. He had the Mid-Atlantic sales manager give away Post-Its to secretaries and other key people in companies up and down the east coast. 3M management was aghast at the cost. Then, abruptly, he stopped giving out free samples. Within a short time, everyone realized how much they had come to rely on those notes. They had become addicted to them. Fry realized that the only way to change the market’s perception about the notes was to get people to try them by giving away samples free.

Dmitriy: Can you think of an easy way for a company to change its perspective on how it looks at its industry?Michalko: One way for a company to look at things with a new perspective is to hire people from some other industry. Citizens Financial Group in Providence, R.I., hires people who have experience outside of banking creative people who can apply what they’ve learned from other industries to the Group s traditional business. For example, they’ve put full-service branches into grocery stores run by a person with a sales background. Their ATM division is run by someone who was in real estate. One of the chief executives has a background in packaging.

Employing people with diverse skills and talents helps the group to continually challenge the status quo when developing business strategies. Most banks, for example, concentrate on being a service for existing customers. Citizens use their grocery store branches to acquire new customers. The staff goes into the grocery aisles wearing their Citizens aprons pushing Citizens shopping carts with promotional offers, and getting into friendly conversations. Their objective is to develop relationships with store customers. Then when shoppers have banking needs, they’ll find a friendly, familiar face at the bank.

Dmitriy: The first time we talked you said something about perception that has changed the way I personally think. You said, “Change the way you look at things and the things you look at change.” When I say it changed the way I think, I mean that sincerely. Thank you again, Michael.

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